26 Feb 2014 AMC- Market held up as Russells broke into new high

26 Feb 2014 AMC- Market held up as Russells broke into new high

Market Summary 

European Markets Closing Prices

European markets are now closed; stock markets across Europe performed as follows:

·         UK's FTSE: -0.5%

·         Germany's DAX: -0.4%

·         France's CAC: -0.4%

·         Spain's IBEX: -0.2%

·         Portugal's PSI: -1.2%

·         Italy's MIB Index: -0.4%

·         Irish Ovrl Index: -0.8%

·         Greece ATHEX Composite: + 3.3%

 Before Market Opens

S&P futures vs fair value: +5.20. Nasdaq futures vs fair value: +15.70.
The S&P 500 futures hover five points above fair value.

Markets across Asia ended mostly higher. Economic data was limited to a Hong Kong's GDP (+3.0% year-over-year versus 3.1% expected), Australia's construction work done (-1.0% quarter-over-quarter versus 0.4% expected), and Singapore's industrial production (+3.9% year-over-year versus 6.8% expected). 

·         Japan's Nikkei fell 0.5% from four-week highs. Panasonic was a notable outperformer, up 5.3%, following yesterday's report it was in talks to team up with Tesla Motors to build a battery plant. 

·         Hong Kong's Hang Seng added 0.5%, gaining for the first time in four days. Real estate shares recovered some of their previous day's losses as China Overseas Land & Investment climbed 3.5% and China Resources Land rose 2.0%. 

·         China's Shanghai Composite gained 0.4%, advancing for the first time in five sessions. Commodity-related names were strong as Sinopec climbed 3.7% and Shangdong Gold surged the limit, 10%. 

Core European indices trade lower across the board. Participants received several economic data points at the start of the trading day. Germany's GfK Consumer Climate ticked up to 8.5 from 8.3 (8.2 expected). Great Britain's Q4 GDP was left unchanged at 0.7% quarter-over-quarter, but the year-over-year reading was revised down to 2.7% from 2.8% (2.8% expected). Separately, Business Investment rose 2.4% quarter-over-quarter (2.6% consensus, 2.0% prior). Elsewhere, Italy's wage inflation came in at 0.6% month-over-month (0.0% prior) and Norway's unemployment rate ticked up to 3.6% from 3.5% (3.5% consensus).

In news, Bank of England Monetary Policy Committee member Ian McCafferty said the current pound strength is not a major problem for exporters, but he would be concerned if the currency continues climbing. Since the start of the year, the pound has appreciated by 0.7% against the dollar. 

·         Germany's DAX is lower by 0.4%. Lanxess leads the decline with a loss of 3.4% after reporting disappointing results. Utilities also lag with E.ON and RWE both down near 2.0%. 

·         Great Britain's FTSE holds a loss of 0.4%. Food retailer Tesco underperforms with a loss of 4.2% in reaction to analyst comments. On the upside, industrial equipment manufacturer Weir Group is higher by 6.9% after reporting better-than-expected quarterly results. 

·         In France, the CAC trades down 0.5%. Consumer names lag with L'Oreal and LVMH Moet Hennessy Louis Vuitton down 1.2% and 1.6%, respectively. 

·         Also of note, Italy's MIB (-0.3%) and Spain's IBEX (-0.3%) have slipped to lows after displaying slim gains earlier.

Market Internals

Market Internals -Technical-
The Dow closed up 19 (+0.12%) at 16198, the Nasdaq closed up 4 (+0.10%) at 4292, and the S&P 500 closed flat at 1845. Action came on mixed volume (NYSE 686 mln vs. avg. of 702; NASDAQ 1960 mln vs. avg. of 1879), with advancers outpacing decliners (NYSE 1884/1203, NASDAQ 1597/1024) and new highs outpacing new lows (NYSE 175/22, NASDAQ 182/17).

Relative Strength: 
Lithium-LIT +3.07%, U.S. Home Construction-ITB +2.82%, Greece-GREK +2.68%, Homebuilders-XHB +2.66%, Retail-XRT +1.88%, Clean Energy-PBW +1.86%, Taiwan-EWT +0.94%, South Korea-EWY +0.85%, Belgium-EWK +0.77%, Chile-ECH +0.70%.

Relative Weakness: 
Junior Gold Miners-GDXJ -3.20%, Silver-SLV -2.85%, Natural Gas-UNG -2.67%, Silver Miners-SIL -2.64%, Poland-EPOL -2.38%, Eastern Europe-ESR -2.20%, Mexico-EWW -1.84%, Turkey-TUR -1.56%, Oil and Gas Exploration-XOP -1.47%, Russia-RSX -1.34%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks End Flat Amid Continued Weakness in Financials
Equity indices finished the Wednesday session on a flat note after surrendering their modest intraday gains. More importantly, the S&P 500 was unable to register a fresh record closing high for the third day in a row.

Stocks slipped from their opening levels, but the early weakness was erased in a flash when it was reported that new home sales in January surpassed estimates (468,000 versus Briefing.com consensus 400,000). The upbeat report sent stocks to new highs, but the S&P 500 ran into resistance just below the 1853 area, which the index was unable to penetrate throughout the afternoon.

Eight of ten sectors ended in the red with energy (-0.6%) seeing the largest loss. However, the daylong underperformance of financials (-0.1%) was more notable as it marked the second day of relative weakness for the bellwether sector. Today's decline narrowed the sector's February gain to 1.8% versus a 3.5% increase for the S&P 500. That showing warrants close attention over the coming days given the vital role the financials play in feeding economic growth and influencing market sentiment.

Elsewhere, the tech sector (+0.1%) was a reluctant participant in the early advance. The reluctance was visible among several top sector components like Apple (AAPL 517.35, -4.71), Microsoft (MSFT 37.47, -0.07), and Visa (V 226.11, -1.00), which lagged throughout the session. Chipmakers, however, held up well with the PHLX Semiconductor Index adding 0.7%. Also of note, the discretionary space added 0.6% thanks to gains among homebuilders and retailers. Homebuilders rallied in reaction to the new home sales report, sending the iShares Dow Jones US Home Construction ETF (ITB 26.27, +0.72) higher by 2.8%. Meanwhile, retailers outperformed after Abercrombie & Fitch (ANF 40.04, +4.05) reported a bottom-line beat on below-consensus revenue.

Although the discretionary sector displayed relative strength, producers of basic materials (+0.7%) fared even better. This took place without the participation of miners as the Market Vectors Gold Miners ETF (GDX 26.05, -0.28) lost 1.1% while gold futures also fell 1.1% to $1328.00/ozt.

Treasuries finished at their best levels of the session with the benchmark 10-yr yield down four basis points at 2.67%.

Participation was on the light side as only 656 million shares changed hands at the NYSE.

Economic data was limited to two reports: 

·         The weekly MBA Mortgage Index fell 8.5% to follow last week's decline of 4.1%. Notably, the purchase index dropped to levels last seen in 1995. 

·         New home sales jumped 9.6% to 468,000 in January from an upwardly revised 427,000 (from 414,000) in December. The Briefing.com consensus expected new home sales to fall to 400,000. Weather-related problems were blamed for a wide variety of poor economic data throughout January. That included a sizable drop in existing home sales and a contraction in the NAHB homebuilders survey. Yet, weather was evidently not a problem in the new home sector as sales reached their highest level since July 2008. 

Tomorrow, weekly initial claims and the Durable Goods report for January will be released at 8:30 ET. Also of note, Fed Chair Janet Yellen will appear before the Senate Banking Committee for the second part of her semiannual testimony on monetary policy. 

·         Nasdaq Composite +2.8% YTD 

·         Russell 2000 +1.7% YTD 

·         S&P 500 -0.2% YTD 

·         Dow Jones Industrial Average -2.3% YTD

Commodities

Closing Commodities: Crude Oil Gains 0.7% Higher In Today's Session, Natural Gas Loses 2.8%

·         Precious metals traded in negative territory today as the dollar index rose higher. Economic reports this morning showed that new home sales jumped 9.6% to 468,000 in January from an upwardly revised 427,000 (from 414,000) in December. The Briefing.com consensus expected new home sales to fall to 400,000.

·         Apr gold fell to a session low of $1322.30 per ounce in morning floor action and eventually settled with a 1.1% loss at $1328.00 per ounce.

·         Mar silver tumbled to a session low of $21.08 per ounce after pulling back from its session high of $21.67 per ounce set in early morning action. Unable to gain much momentum, it settled with a 3.2% loss at $21.25 per ounce.

·         Apr crude oil traded higher as it gained support on better-than-anticipated inventory data. The EIA reported that for the week ending Feb 21, crude oil inventories had a build of 0.068 mln barrels when a larger build of 1.2-1.3 mln barrels was anticipated. The energy component rose as high as $102.90 per barrel and settled at $102.62 per barrel, or 0.7% higher.

·         Apr natural gas spent its entire floor session in the red. It chopped around in the $4.51-4.62 per MMBtu range and eventually settled with a 2.8% loss at $4.54 per MMBtu.

COMEX Metals Closing Prices

  Apr gold fell $14.70 to $1328.00/oz 

·         Gold fell for the first time in four sessions as the dollar index rose higher. Economic reports this morning showed that new home sales jumped 9.6% to 468,000 in January from an upwardly revised 427,000 (from 414,000) in December. The Briefing.com consensus expected new home sales to fall to 400,000. The precious metal slid to a session low of $1322.30 in morning floor action and eventually settled with a 1.1% loss. 

  Mar silver fell $0.71 to $21.25/oz 

·         Silver also spent today's floor trade in negative territory. It tumbled to a session low of $21.08 after pulling back from its session high of $21.67 set in early morning action. Unable to gain much momentum, it settled with a 3.2% loss. 

  Mar copper fell 2 cents to $3.24/lbs

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         May corn fell 1 cent to $4.60/bushel 

·         May wheat fell 12 cents to $6.05/bushel 

·         May soybeans rose 12 cents to $13.98/bushel 

·         Mar ethanol settled unchanged at $2.23/gallon 

·         May sugar (#16 (U.S.)) fell 0.08 of a penny to 22.12 cents/lbs

NYMEX Energy Closing Prices

  Apr crude oil rose $0.76 to $102.62/barrel 

·         Crude oil traded higher today as it gained support on better-than-anticipated inventory data. The EIA reported that for the week ending Feb 21, crude oil inventories had a build of 0.068 mln barrels when expectations called for a build of 1.2-1.3 mln barrels. The energy component rose as high as $102.90 and settled with a 0.7% gain. 

  Apr natural gas fell 13 cents to $4.54/MMBtu 

·         Natural gas, on the other hand, spent its entire floor session in negative territory. It chopped around in the $4.51 to $4.62 range and eventually settled with a 2.8% loss. 

  Apr heating oil settled unchanged at $3.04/gallon 

  Apr RBOB rose 2 cents to to $2.99/gallon

Treasuries

Yields Slip to Three-Week Lows: 10-yr: +09/32..2.668%..USD/JPY: 102.42..EUR/USD: 1.3685

·         Treasuries closed on their highs, supported by today's strong $35 bln 5y note auction. Click here to see an intraday yields chart.

·         Maturities hovered little changed into the cash open before rallying into this morning's new home sales (468K actual v. 400K expected) beat. 

·         Post-data selling dropped maturities back onto their respective flat lines ahead of today's 5y auction. 

·         The strong auction drew 1.530% and a strong 2.98x bid/cover (12-auction average 2.62x). A 50.6% indirect bid helped offset the light 9.1% direct takedown. 

·         Traders piled into Treasuries as the results of the auction were digested, pressing longer dated yields to multi-week lows as they shed between -2.5/-3bps. 

·         The 30y lost -2.6bps, and finished the session @ 3.635%. The yield on the long bond closed at a three-week low, causing traders to return their focus back towards the 3.575%/3.600% area. 

·         The 10y shed -2.8bps, ending the day @ 2.673%. The benchmark yield settled on minor support in the area, and is closing in on its first print below the 200 dma since early May.

·         In the belly, the 5y fell -2.7bps to 1.483%. Action slipped back below the 100 dma, and is testing support in the 1.450%/1.500% region. The 200 dma aids support in the 1.400% area. 

·         Today's bid flattened the yield curve as the 2-10-yr spread narrowed to 235bps. 

·         Precious metals lost ground as gold fell -$14 to $1329 and silver shed $0.75 to near $21.21. 

·         Data: Initial and continuing claims, and durable orders (8:30).

·         Auction: $29 bln 7y notes.

·         Fed Speak: Fed Chair Janet Yellen will appear before the Senate Banking Committee for her semi-annual testimony (10). ATL's Lockhart and KC's George take part in a discussion on "The President's Perspective" (15:15). 

15:21 ANF Abercrombie & Fitch - - Earnings Mover extends today's breakout over the $40-mark, approaching its 200-day sma near 40.25. (40.09 +4.10)

Next Day In View 

Economic Commentary

Economic Summary: New Home easily beat expectations; Durable orders tomorrow at 8:30; Yellen to give Senate testimony tomorrow at 10:00
Economic Data Summary:

·         Weekly MBA Mortgage Applications -8.5% (Last Week was -4.1%)

·         January New Home Sales 468K vs Briefing.com consensus of 400K; December was 414K

o    That included a sizable drop in existing home sales and a contraction in the NAHB home builders survey. Yet, weather was evidently not a problem in the new home sector as sales reached their highest level since July 2008. The more we look at the overall economic picture, the less we believe weather was a large factor in the recent downturn. With the exception of the Midwest, where sales fell a plausible weather-related 17.2%, sales were strong throughout the country. 

Upcoming Economic Data:

·         Weekly Initial Claims due out Thursday at 8:30 (Briefing.com consensus of 335K; Last Week was 336K)

·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.975 M ; Last Week was 2.981 M )

·         January Durable Goods due out Thursday at 8:30 (Briefing.com consensus of -1.1%; December was -4.2%)

·         January Durable Goods Ex-Transportation due out Thursday at 8:30 (Briefing.com consensus of -0.3%; December was -1.3%)

Upcoming Fed/Treasury Events:

·         Boston Fed President Eric Rosengren (not a voting FOMC member, dovish) to speak tomorrow at 12:00

·         The Treasury will auction off new debt this week.  The results of each auction below will be announced at 13:00

o    Wednesday:$35 bln in 5 years notes

o    Thursday: $29 bln in 7 year notes

·         Janet Yellen will testify to the US Senate tomorrow at 10:00

·         Atlanta Fed President Dennis Lockhart (not a voting FOMC member, typically moderate) to speak tomorrow at 15:15

On other news.... 

Currencies 

Dollar Tests 80.50 Resistance: 10-yr: +09/32..2.672%..USD/JPY: 102.47..EUR/USD: 1.3672

·         The Dollar Index presses session highs near 80.50 as trade remains on track to post its first gain in four days. Click here to see a daily Dollar Index chart.

·         Today's bid has the Index testing resistance in the 80.50 area that dates back to the beginning of the year and is helped by the 100 dma (80.56). 

·         EURUSD is -70 pips @ 1.3675 as action breaks down to a two-week low. Weighing on the single currency was a jump in the number of registered French jobseekers, which rose to a record 3.316 mln, and some saber rattling by Russia as it conducts military exercises on the Ukraine border. Support in the 1.3650/1.3700 area will be watched closely. Eurozone data is heavy as M3 money supply and private loans accompany German preliminary CPI and German unemployment change. 

·         GBPUSD is -30 pips @ 1.6645 as the early gains have reversed into losses. An early bid developed following the in-line Q4 GDP Second Estimate, lifting the pair to a test of the 1.6700 level, but steady selling over the course of the morning dropped action into the red. Sterling's low for the day (1.6620) would come in the moments following the strong U.S. new home sales report.

·         USDCHF is +50 pips @ .8915 as trade hold just off the highs. Today's bid has run action out of the .8860/.8900 range that has been in place over the past week and a half, and has trade on track for its best close in two weeks. Switzerland's GDP and employment level readings are due out tomorrow. 

·         USDJPY is +25 pips @ 102.50 as action continues to test the upper end of the 101.50/102.50 range that has been in place throughout most of February. Today's trade has been rather lackluster, mimicking that of yesterday, as data and news out of Japan remain absent. 

·         AUDUSD is -70 pips @ .8950 as trade presses three-week lows. The hard currency has fallen victim to the disappointing construction work done figure, and is now testing notable support in the .8900/.8950 area that is helped by the 50 dma (.8906). A breakdown puts the January/February lows near .8700/.8750 back in focus. 

·         USDCAD is +55 pips @ 1.1140 as action presses its best levels of the day. Participants will continue to watch the 1.1200 level as a move above there would mark the best print since July 2009. Canada's trade balance will cross the wires tomorrow morning.

Jason's Commentaries



Another volatile session in the market again. The market went through a roller coaster ride last night, however, Russells made it to a new high onces again. Looking at the internals, the market has been really divergent. I suppose the market is waiting for a new catalyst to break up or down. Let's just see how the market reacts. So far, I think the market has more chance to break up higher than down since the Nasdaq and Russells broke into the high once again. Volumes were standing at 670.7m shares traded on the NYSE. The main moving factor in the market last night was Materials, gaining 0.76% while the energy sector lost 0.63% that counteract the gain in materials. Since next week is the employment report once again, we might be consolidating until then. 

Market Call:FLAT to the upside

Date: 27 Feb 2014